New rules 'restrict mortgages to people with rich parents'
Lending rules imposed by the Central Bank have taken the "froth" out of property market, the Bank's chief economist said.
But mortgage experts claimed the lending rules were leading to a situation where only the sons and daughters of rich parents were now able to afford a deposit to get approved for a mortgage.
New figures from the banks show the number of people approved for a mortgage was down 10pc in October compared with the same month last year.
Central Bank economist Gabriel Fagan strongly defended the lending rules, speaking at a property conference.
He said the early evidence suggested the measures were cooling the property market.
"Tentative evidence suggests that the measures have had a positive effect of removing 'froth' from property prices, particularly in the Dublin residential market," he said.
"This is confirmed by the slowdown in price dynamics and evidence from the Central Bank survey of the house price expectations of property market professionals."
But the Association of Expert Mortgage Advisers (AEMA) said young couples with families were unable to meet Central Bank rules on the size of deposits needed to qualify for a mortgage, particularly those in Dublin.
Trevor Grant of the AEMA called for a review of the rules.
He warned: "Without a review of the rules, we expect the first-time buyer Dublin market will be dominated by adult children with rich parents."
A total of 2,588 people were approved by banks for a mortgage in October, down 268 on the total for the same month last year, figures from the Irish Banking and Payments Federation show.
Economist with Goodbody Stockbrokers Dermot O'Leary said the slowdown in lending would see just €4.9bn in mortgage lending this year.
"This compares to a 'normal' mortgage market of €8bn in Ireland," he said.
However, Mr O'Leary cautioned that there was a flurry of buying at the end of last year as buyers were anticipating the new lending restrictions being introduced and the end of tax breaks.
The average mortgage approval was €189,900 in October, up just 2.6pc on the year.
Economists said this figure showed that the Central Bank rules were slowing house price inflation.